A rough final quarter of 2015, during which Nucor was hit with $237.1 million in impairment charges and saw net sales fall 31%, has led the company to write off $84.1 million worth of equipment for a planned $1 billion blast furnace project at its St. James Parish plant and put the project on hold.
“We determined that certain assets, the majority of which are engineering and equipment related to the current blast furnace project at our St. James Parish, Louisiana, site will not be utilized,” Nucor says in a press release issued today detailing fourth quarter performance.
Should the company decide to move forward with the blast furnace project in the future, it says “the project design will be evaluated at that time using new equipment and engineering.” As a result of the company’s decision, “we recorded an $84.1 million non-cash charge to write-down the entire amount of these capitalized assets.”
Nucor recorded a net loss of $62 million during the fourth quarter, during which net sales were 31% compared to the same quarter last year and total steel mill shipments were down 16%. For all of 2015, Nucor recorded a net sales decrease of 22% to $16.44 billion.
As Daily Report first reported last month, Nucor missed a year-end deadline to notify Louisiana Economic Development on its final investment decision on four remaining phases of a planned $3.4 billion iron and steel plant in St. James Parish. The company has completed the first phase of the project, a $750 million direct reduced iron plant.
It’s not clear whether Nucor will ultimately proceed with the four additional phases, but if it does, a new incentive deal will have to be worked out with state officials. By missing the deadline, the state is no longer obligated under a 2010 agreement to provide up to $130 million in incentives to help build out the four additional phases.
“Due to market conditions and overcapacity in the global and domestic steel industries, any decision to construct a redesigned blast furnace at the St. James Parish site will be made at a future date,” reads today’s release from the company.
—Steve Sanoski
